Global Leading Indicators

This month’s release of the composite economic indexes incorporates annual benchmark revisions which bring them up-to-date with revisions in the source data. These revisions do not change the cyclical properties of the indexes. The indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the benchmark revision is made and the entire histories of the indexes are recomputed. As a result, the revised indexes, in levels and month-on-month changes, will not be directly comparable to those issued prior to the benchmark revision.

For more information, please visit https://www.conference-board.org/topics/business-cycle-indicators/ or contact us at indicators@conference-board.org.

The Conference Board Leading Economic Index^® (LEI) for Germany declined by 0.4 percent in November 2023 to 89.5 (2016=100), after falling by 0.8 percent in October. The LEI contracted by 3.2 percent in the six-month period from May to November 2023, an accelerated rate of decline compared to the 0.2 percent contraction over the previous six-month period.

 The Conference Board Coincident Economic Index^® (CEI) for Germany declined by 0.3 percent in November 2023 to 103.8 (2016=100), after ticking up by 0.1 percent in October. The CEI fell by 0.7 percent in the six-month period from May to November 2023, more than reversing a 0.4 percent increase over the previous six-month period from November 2022 to May 2023.

“The LEI for Germany declined for a fifth consecutive month in November,” said Allen Li, Associate Economist at The Conference Board. “Most components of the Germany LEI were little changed or negative in the month, except stock prices. The LEI trended downward for most of 2023 and continues to signal possible recession ahead. The Conference Board currently estimates Germany’s real GDP to contract by 0.3 percent year-over-year in 2023, but possibly improve to a modest 0.2 percent growth rate in 2024.”

The LEI for Germany continued to decline in November

Most components of the Germany LEI were little changed or negative in November, except stock prices

The trajectory of the LEI still signals a possible recession ahead 

Note: The chart illustrates the so-called 3D’s rule which is a reliable rule of thumb to interpret the duration, depth, and diffusion – the 3D’s – of a downward movement in the LEI. Duration refers to how long-lasting a decline in the index is, and depth denotes how large the decline is. Duration and depth are measured by the rate of change of the index over the last six months. Diffusion is a measure of how widespread the decline is (i.e., the diffusion index of the LEI ranges from 0 to 100 and numbers below 50 indicate most of the components are weakening). The 3D’s rule provides signals of impending recessions 1) when the diffusion index falls below the threshold of 50 (denoted by the black dotted line in the chart), and simultaneously 2) when the decline in the index over the most recent six months falls below the threshold of -4.6 percent. The red dotted line is drawn at the threshold value (measured by the median, -4.6 percent) on the months when both criteria are met simultaneously. Thus, the red dots signal a recession.

The composite business cycle indexes pre- and post- benchmark revisions: 1965-present

About The Conference Board Leading Economic Index^® (LEI) for Germany: The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The indexes are constructed to summarize and reveal common turning points in the economy in a clearer and more convincing manner than any individual component. The CEI is highly correlated with real GDP. The LEI is a predictive variable that anticipates (or “leads”) turning points in the business cycle by 5 months. Shaded areas denote recession periods or economic contractions. The dates above the shaded areas show the chronology of peaks and troughs in the business cycle.

The seven components of The Conference Board Leading Economic Index^® for Germany include: New Orders, Yield 10-Year Minus 3-Month Time Deposits Rate, Consumer Confidence Index, Inventory Change, New Residential Construction Orders, Stock Price Index, and Gross Enterprises and Properties Income.

To access data, please visit: https://data-central.conference-board.org/

About The Conference Board

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